The lower the better

If the direct distribution of lower denomination banknotes to marketers, merchants, shopping malls, supermarkets, toll gates, etc. by the Central Bank of Nigeria (CBN) is not abused, and is well monitored, the exercise is expected to solve a lot of problems caused by the scarcity of such denominations in our markets. Towards meeting this objective, the CBN approved the direct disbursement of N200, N100, N50, N20, N10 and N5 denominations to economic agents. The apex bank embarked on this exercise in line with its key objectives of issuance and management of legal tender currency in Nigeria, as enshrined in the CBN Act, 2007 (section 1).

The bank’s director, currency operations department, Mrs. Priscilla Eleje, confirmed at the public sensitisation and enlightenment campaign of the bank’s direct intervention on lower denominations that the exercise was the bank’s response to the inadequate circulation of the denominations. The exercise, which started in Abuja, has been extended to Lagos, Kano, Enugu, Onitsha, Ibadan, Yola, Gombe, Katsina, Jos, Port-Harcourt, Minna and Umuahia.

As the CBN itself observed, these denominations have virtually disappeared from the markets in spite of the huge volumes that are printed and circulated annually. What this tells us is that the banknotes are being diverted illegally to areas other than for facilitation of buying and selling. Gone were those days when bank customers smiled home from banking halls with new bank notes. Whereas these denominations are scarce in the markets and the banks, they are available for sale at motor parks and other public places where people pick them up for a premium, in order to ‘spray’ at social functions. Of course those into this illicit business do it in connivance with some unscrupulous bank officials who also get their own cuts from the deals.

The implication of this is not only the scarcity of the banknotes but also in their being mutilated in the process of ‘spraying’ them at parties. Many times the notes are trampled upon by dancing feet, thus reducing their lifespan. At the end of it, the mutilated banknotes end up in circulation and it is only a question of time for them to become dirty, thus leading to their rejection by some traders. Dirty notes also come with their peculiar challenges, including the possibility of being contaminated and endangering the health of whoever comes in contact with them.

CBN’s direct intervention in the disbursement of the lower denominations is a good policy that is likely to have salutary effects on economic transactions if only the apex bank can see it through. It is capable of discouraging inflation because, some items that should be sold for lesser amounts have suddenly become expensive due to the scarcity of the lower denominations for change. The policy will also reduce the quarrels generated between traders and their customers due to the same reason.

But the apex bank must be ready to sustain the sensitisation campaign among the stakeholders for maximum effect. The framework for disbursement and what is expected of the beneficiaries must be clearly spelt out. For instance, the fact that they are not supposed to pay any extra charge to access the lower denominations should be made clear to them so they are not short-changed by bank workers who may be waiting in the wings to exploit the policy. Security agents should be sent after those now making a living out of buying and selling of new banknotes; and those who refuse to desist should be arrested and prosecuted because what they are doing is tantamount to economic sabotage.

As suggested by the market leader of Tejuosho Model Market, Alhaja Titilayo Noyimot, the sensitisation and enlightenment should be extended to transporters because the issue of change has often led to scuffles between passengers and bus conductors, in some cases with very dire consequences.

Above all, the CBN should empower its monitoring teams with the requisite tools needed to detect saboteurs who might want to corner the new notes for personal advantage and hand them over to security agents for prosecution. This is important because the exercise cannot succeed if it is not well monitored.